Landlord withholds rental deposit

This week a reader seeks expert advice from the Property Poser panel regarding an unreturned deposit on a rental property she vacated two years ago.

Her landlord claims that she is liable for additional expenses such as sewage and refuse removal and is withholding the money in lieu of these.

Although a written lease was concluded, the reader has checked the terms and it is silent on this point. As she feels she has not defaulted on any terms, she has refused to pay the additional costs.

Brian Kinnear - Fresh Lifestyle Properties

Brian Kinnear – Fresh Lifestyle Properties

The reader has sought the assistance of an attorney, who sent letters to the landlord. These have been ignored and, according to her attorney, taking the matter further will be very expensive.

In the case of a residential property, the Rental Housing Act is applicable, says Brian Kinnear, principal of Fresh Lifestyle Properties in East London.

“Section five sets out the provisions relating to the application of the deposit after vacating a leased property. Based on the facts presented, the landlord has no claim to the deposit and cannot refuse a refund.”

Furthermore, says Kinnear, it should be noted that the deposit should have been invested in an interest-bearing account for the benefit of the reader.

“The Act provides that the reader may refer the matter to the Rental Housing Tribunal. A decision by the tribunal is deemed to be an order of the Magistrates’ Court, which will then supply the mechanism for its enforcement.”

Resolving the matter in this way would also be more cost and time effective than a legal remedy, says Kinnear.

“However, it becomes a little more complicated if the lease was for a commercial property.”

Ideally, says Kinnear, the lease itself should be properly examined to determine the remedies available to the tenant in the case of breach.

In this instance, the landlord’s breach would be his failure to return the reader’s deposit, says Grant Berndt from Abdo Abdo Attorneys in East London.

Grant Berndt - Abdo  Abdo Attorneys

Grant Berndt – Abdo Abdo Attorneys

“If the lease provides a specific remedy, such as arbitration for example, the reader should, unless the lease allows for deviation, make use of the agreed remedy.”

If the lease is silent, says Berndt, the reader will have to issue summons for the return of the deposit.

“Where this becomes complicated is that the landlord may raise that he is due the money or he may even institute a counterclaim for additional monies.”

Berndt says this kind of matter requires a strong resolve on the part of the former tenant, as it may be a substantially long wait before any kind of resolution is reached.

“The matter should progress in a fairly structured manner and culminate in a decision by the court. Legal costs, which may well exceed the deposit several-fold, will be for the reader’s account pending judgment.”

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